tvWORKS

1. tvWORKS

2. What is tvWORKS? • Single source piece of research covering: • FMCG purchasing • TV viewing • Conducted independently by TNS • 3000 homes nationally • Unique • 5m purchases • 28 FMCG product categories = 243 brands • 3 years of data to December 2003 • Results analysed in terms of purchase occasions

3. The Power of TV • Overall, TV advertising continues to produce an immediatesales boost. • On average, it gives a 4.4% uplift in purchases in the first4 weeks after advertising was seen. • However, the incremental purchases continue beyond thisfirst month. Source: tvWORKS, Jan01-Dec03, seen at least 1 spot in prior 28 days

4. TV advertising works very well to drive sales of launch brands New brands Established brands Brands in high interest categories e.g. Toiletries, Ready meals tend to show higher than average % sales growth For large established brands & staples, % sales growth is much smaller but in £s is significant TV Advertising is effective at all stages ofa brand’s lifecycle Increase in purchasing within 4 weeks Source: TNS Mediaspan, database of case studies, 1995-2002

5. TV Advertising continues to drive sales after the first month • The effect of TV advertising actually works beyond the first month after the advertising was seen. • For every brand bought, as a result of advertising, a consumeris likely to make 4 more purchases than expected of that brand within the year. • So looking at the effect of advertising in the first month alone under-values the power of TV advertising by excluding these extra purchases. • At the same time, over the long-term advertising buildsbrand equity Source: tvWORKS, Jan01-Dec03

6. ITV1 outperforms in terms of Incremental Purchases % of incremental purchases vs % of FMCG impacts Source: tvWORKS, Jan01-Dec03, each channel’s % of incremental purchases attributable to TV where at least 2/3rds of spots seen in prior 28 days were on a single channel / NMR, FMCG category, based on housewives ratecard weighted impacts

7. Peak accounts for the greatest amount of Incremental Purchases % of incremental purchases vs % of FMCG impacts Source: tvWORKS, Jan01-Dec03, each daypart’s % of incremental purchases attributable to TV where at least 2/3rds of spots seen in prior 28 days were in a single daypart / NMR, FMCG category, based on housewives ratecard weighted impacts

8. Benchmarks by Product type % increase in purchasing in first 4 weeks Source: tvWORKS, Jan01-Dec03, seen at least 1 spot in prior 28 days

9. ITV1 is the most effective channel at driving sales ITV1’s % of incremental purchases vs % of FMCG impacts Source: tvWORKS, Jan01-Dec03, ITV1’s % of incremental purchases attributable to TV where at least 2/3rds of spots seen in prior 28 days were on a single channel / NMR, FMCG category, based on housewives ratecard weighted impacts

10. Home type makes little difference All 3 groups are more responsive than the average TV Effectiveness by Home Type and Demograph % increase in purchasing in first 4 weeks Source: tvWORKS, Jan01-Dec03, seen at 1 spot in prior 28 days

11. How Advertising & Promotions Work Together • The majority (69%) of purchases made after exposure to TV advertising are not on price promotion • TV advertising generates a 4.0% increase in sales for this majority in the following 4 weeks • The remaining 31% of purchases made after seeing TV advertising are on price promotion. For these, advertising increases sales by 6.6% over and above the gain from the price cut • If you cut your price and tell people about the brand by advertising on TV you get a double boost in sales Source: tvWORKS, 84 weeks to March 02, seen at least 1 spot in prior 28 days

12. ITV1 is most effective for brand building. But for price promoted purchases there is little difference in effectiveness regardless of channel choice ITV1 works better than other channels for Full Price Purchases % increase in purchasing in first 4 weeks Source: tvWORKS, 84 weeks to March 02, seen at least 1 spot in prior 28 days

13. Contribution to Sales Uplift 57% 27% 15% Low Loyal Consumers respond most to TV Advertising % increase in purchasing in first 4 weeks Source: tvWORKS, Jan01-Dec03, saw at least 1 spot in prior 28 days, loyalty reflects spend on brand as % of spend on category, low loyal = 0-10%, medium loyal = 10-39%, high loyal = 40-100%

14. The Importance of Low Loyal Consumers • Low Loyal Brand Buyers respond most to TV advertising because: • they know least about the brand • TV advertising has the most to say to them • These buyers are important since they may become the core buyers of your brand in the future. • Nevertheless even the most loyal buyers are influenced to a small degree by TV advertising seen recently.

15. Value for money purchasing Trial purchasing Promotions attract Deal Buyers while TV encourages Trial Purchasing % Share of Purchasing by Consumer Group Source: tvWORKS, 84 weeks to Mar02, loyalty reflects spend on brand as % of spend on category, low loyal = 0-10%,medium loyal =10-39%, high loyal = 40-100%, deal buyers buy at least 50% more brand purchases on promotion

16. £28.65 Total £27.12 TV advertising reaches those prepared to buy at full price TV Advertising reaches more Valuable Customers Annual value of brand buyers Source: tvWORKS, 84 weeks to March 02, seen at 1 spot in prior 28 days

17. Reach of brand purchases from TV advertising vs promotions Source: tvWORKS, 84 weeks to Mar02, saw at least 1 spot in prior 28 days, loyalty reflects spend on brand as % of spend on category, low loyal = 0-10%, medium loyal = 10-39%, high loyal = 40-100%, deal buyers buy at least 50% more than the average person of their brand purchases on promotion

18. Increase in likelihood to purchase Inter purchase interval number of advertising exposures Source: tvWORKS, Jan01- Dec03, exposure seen in inter-purchase interval

19. Increase in purchasing within 4 weeks % number of exposures seen within time interval Source: tvWORKS, Mar96-Mar98, Meridian

20. 3+ exposures 2+ exposures 1+ exposures Increase in purchasing within 4 weeks 50% 40% 30% 20% 10% 0 0 3 7 14 21 28 Days prior to purchase Source: tvWORKS, Mar96-Mar98, Meridian

21. 3+ seen within 1 day 3+ seen within 2 days 3+ seen at any time Increase in purchasing within 4 weeks 50% 40% 30% 20% 10% 0 0 7 14 21 28 Days prior to purchase Source: tvWORKS, Mar96-Mar98, Meridian

22. 3 alternative schedule deployments Continuous Burst Pulsing Month 1 Month 12

23. Pulsing is the Most Effective Strategy Incremental sales index 100 = 2600 tvrs in continuous strategy TVRs Source: tvWORKS, Mar96-Mar98, Meridian

24. No TV Advertising for a year produces a 13% decline in Purchasing Sales index Minimum days elapsed since advertising was last seen Source: tvWORKS, 2 years to Jan03, the sales index compares the amount of purchasing of the brand at each point in time to the amount of purchasing at the control (when advertising had been seen in the last 28 days).

25. Brands on Promotion decline more quickly without TV Advertising Sales index Minimum days elapsed since advertising was last seen Source: tvWORKS, 2 years to Jan03, the sales index compares the amount of purchasing of the brand at each point in time to the amount of purchasing at the control (when advertising had been seen in the last 28 days).

26. Lightly Advertised Brands decline faster in the absence of TV Advertising Sales index Minimum days elapsed since advertising was last seen Source: tvWORKS, 2 years to Jan03, heavily advertised brands spent £10m+ on TV over prior 3 years (1999-2001), lightly advertised brands spent £2.5m or less on TV over the same 3 years, the sales index compares the amount of purchasing of the brand at each point in time to the amount of purchasing at the control

27. The Low Loyals are most effected by the absence of TV Advertising Sales index Minimum days elapsed since advertising was last seen Source: tvWORKS, 2 years to Jan03, loyalty reflects spend on brand as % of spend on category, low loyal = 0-10%, high loyal = 40-100%, the sales index compares the amount of purchasing of the brand at each point in time to the amount of purchasing at the control

28. Conclusions • Television advertising is effective at all stages of a brand’s lifestyle • Calling a halt to television advertising leads to a fall in brand sales • TV advertising delivers an average sales uplift of 4.4% with 4 weeks of the advertising being seen, and then delivers on average 4 further purchases during the year • More lightly advertised brands suffer from a lack of TV presence in comparison with those making a larger investment in television • TV advertising encourages trial purchasing and helps recruit a new generation of loyal customers to replace those that are lost

29. Conclusions • A pulsing deployment of advertising is highly effective • Peak time advertising delivers the greatest amount of incremental purchases • Whether leading brands, premium brands, staple or new brands, ITV1 is better at increasing purchasing than other TV channels • Likelihood of consumer purchase increases with frequency and recency of exposure to TV advertising • ITV1 is the most effective channel at building sales • Cutting adspend is detrimental to medium and long-termbrand growth

30. Notes on Methodology • Each panel household was given set top meters to record their TV viewing and a bar code scanner to collect the details of all grocery products brought into the home. • All brands within the 28 FMCG categories which had been active on TV were selected giving a database of 243 brands. Thus there was no bias in the brands chosen and it was “the world as found”. • The research looks at the effects of advertising in the first month after it was seen. The effect of TV is calculated by comparing the number of purchase occasions of brand X in homes that saw advertising for that brand in the last 28 days with the number of purchase occasions of brand X in matched sample homes that did not see advertising.

31. Notes on Methodology • So, if the homes seeing Brand A's advertising are responsible for 210 purchase occasions of Brand A, and the homes which did not see Brand A's advertising are responsible for only 200 purchase occasions, the difference is +10 in favour of the group that saw TV advertising. This represents +5% incremental uplift on the "expected" level of purchasing of 200 and is attributed to the effects of TV advertising. • The uplift can be attributed to TV advertising because the effects of price promotion, previous brand loyalty & weight of viewing have been removed by the matched sampling.